U.S. Session Open: Focus On Equities And The USD

Posted Tuesday, August 29, 2017 by
Shain Vernier • 2 min read

Well, there is no sense sugar coating the situation for today’s U.S. session. Tensions with North Korea have flared up yet again. The fallout from Hurricane Harvey looks to be greater than expected. Going into tomorrow’s U.S. GDP release, investors are a bit nervous when it comes to the U.S. economic and geopolitical situation.

Out of uncertainty comes opportunity. As traders, it is our job to find a silver lining during challenging times.


Economic Metrics

This morning has brought us two positive releases of the Redbook Index:

  • Redbook (MoM, August 21) came in at 2.0%, up from the previous number of -0.2%

  • Redbook (YoY, August 21) came in at 4.3%, previously 3.2%

Also, the S&P/Case Shiller Home Price Indices came in unchanged at 5.7%. As I mentioned yesterday, we have more bill auctions today. These auctions are not typically market movers, but as we move deeper into 2017 they are certain to garner more attention.


E-mini S&P 500 Futures

All in all, today’s economic news is fairly good and the market desperately needs some. However, politics and natural disasters rule the day. Today’s session has September E-Mini S&P 500 futures trading gap down.


ES Daily ChartE-Mini S&P Futures Daily Chart- Gap Down

Tensions with North Korea and a loss of production due to Harvey have S&P traders running for the door. Our downside Fibonacci levels at 62% and 78% from last week have shown some resilience. I will be watching them very closely for the remainder of the week.

The cash open has been a positive for the E-mini S&Ps. Currently, price is looking to fill in last night’s gap.


USD Futures Index

As my colleague Skerdian discussed in the morning forex brief, the USD is showing considerable weakness. Is this going to be the rule for the remainder of 2017?


US Dollar indexUSD Futures Index, Daily Chart

The USD futures index is best described as ugly. The summer months have shown commitment from sellers and prolonged weakness. Failure at the 38% level from the July high to the early-August low was a big signal that the USD was, and is, headed much lower.

Bottom Line: The past few weeks have been a prime illustration of the impact geopolitics and mother nature can have on an economy. Uncertainty is the word of the day when talking about the current U.S. economic situation.

Tomorrow’s GDP release is going to be crucial. If GDP misses projections, we are likely to see considerable weakness in both assets.

If you are active in these markets, tread lightly. Trade smart and watch the money management!

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